- Relations between the EU and China have gradually become more problematic. Increasing Chinese assertiveness has dashed initial hopes of a burgeoning strategic partnership, and a sense of competition has come to permeate their relationship.
- In the autumn of 2021, the EU published its first Indo-Pacific strategy, building on existing policy frameworks and approaches but also heralding a more strategic direction for its involvement in the region.
- With the Indo-Pacific strategy the EU ventures into the realm of geopolitics, something which is bound to impact its relations to China. But questions remain as to whether the EU is ready for geopolitical competition in this region and how it intends to find a role for itself based on strategic autonomy within the confines of the US-China rivalry?
EU-China relations in perspective
From the late 1990s to the mid-2010s, EU-China relations were characterised by an increasingly ambitious mutual engagement in the framework of a strategic partnership. The nature of the interaction between the two changed progressively over the period. Initially, the EU acted as the senior partner seeking to socialise China to the rules and principles of the international multilateral order, and supported China’s membership of the WTO. Towards the end of the 2000s, however, the roles had been reversed and China started to associate the EU with its worldview presented in common strategy papers.
Several reasons lie behind the shift. First and foremost is the undeniable fact that China has become a great power on par with the US both in economic and strategic terms. With this newfound status, China has become increasingly assertive on the international scene. China now pursues its interests with the conviction of the strength of its own power and has shifted its outlook on the world from favouring multipolarity to seeing itself locked into a bipolar contest with the US.
It took some time for the EU to realise the implications of this global strategic shift. The former US President Donald Trump’s aggressive stance towards the EU – metering out sanctions on steel and other goods, showing a strong disregard for ongoing international negotiations, not least the nuclear deal with Iran and the UN climate change convention, and his contempt for the security guarantees of NATO – surprised Europeans and made them feel alone in the world. Soon followed a realisation that the relative certainty that rules and principles be observed in international politics was fading away as great powers flouted even the most central principles of international law and diplomacy and disregarded the commitments taken in the confines of international organisations.
For the EU, the erosion of the rules-based international order is deeply regrettable and its possible replacement with a new power-based order is troubling. The election of Joe Biden as American president in November 2020 reset EU relations with the US (and also brought in expectations of alignment with American interests), but this did not temper the strategic rivalry between the US and China. For its part, the EU has already drawn some conclusions about the consequences of a changing world order and is strengthening its strategic autonomy in order to defend its interests more vigorously.
The EU had also grown wary of the conduct of China in world affairs, especially its disregard for human rights and its persistent disrespect for the rules of trade and investment. To this effect, it declared China to be an economic competitor and a systemic rival promoting in its 2019 Strategic outlook on China. In another development, the new President of the European Commission Ursula von der Leyen pronounced upon taking office that her Commission would adopt a geopolitical view of the world.
The Coronavirus pandemic underscored the fragility of the multilateral system in terms of public health, international value chains and the supply of strategic resources, be it semi-conductors, microchips, rare-earth metals, or personal protective equipment and vaccines. It provided China with an opportunity to intensify human right abuses in Xinjiang, repress the democracy movement in Hong Kong and step up pressure on Taiwan.
In the spring of 2021, relations between the EU and China took a turn for the worse as the EU joined other western states to sanction Chinese individuals and companies for breaches of human rights in Xinjiang. China responded with counter-sanctions against members of European Parliament, the ambassadors of EU member states in the Political and Security Committee as well as German and Swedish individuals and the Mercator research institute. As a direct consequence of the Chinese sanctions, the European Parliament suspended the ratification of the EU-China Investment Treaty. The European Parliament declared that it would not ratify the agreement as long as some of its members remained sanctioned by China.
The EU Indo-Pacific Strategy
In September 2021, the High Representative of EU foreign affairs and security policy and the President of the European Commission presented a joint communication on the EU strategy for the Indo-Pacific. The impetus for this strategy came from a number of EU member states, France, the Netherlands and Germany, which have been pushing for a more forceful stand of the EU in the region.
The launch of the strategy does not only indicate the importance of the Indo-Pacific region in term of trade, access to growth markets and protection of value chains for the European economy, but also marks the first political initiative to bolster the EU’s strategic presence in the region and project EU geopolitical interests. So what is the EU’s role in the Indo-Pacific region and through what means does it intend to project its interests?
It is noticeable that the EU formulates both material and ideational interests with geopolitical significance vis-à-vis the Indo-Pacific. From an economic perspective, the de-coupling of China from the global economy, the fragility of value-chains and supply of strategic resources, such as microchips and rare-earth metals, pose real and imminent challenges for the EU in trade, industrial competitiveness and technological advancement. The overall stability of the region and the containment of conflicts, for instance in regard to international maritime waterways, disputed territories and the threat of a military flare-up in the Taiwan Strait, are also of great concern.
The EU’s responses to these challenges are largely oriented toward milieu-shaping, i.e. defending the rules-based international system and coaxing states to act according to the rules and principles of international law and diplomatic practice. There are also indications that some EU member states are ready to deploy naval forces in the framework of regional capacity building and a willingness to play a larger role in the ASEAN security architecture.
Another significant dimension of milieu-shaping is linked to the EU’s own paradigmatic goals in climate change and sustainable development. The success of the EU’s conversion to a green economy and sustainable societal development hangs not only on internal reforms but also on a benign international context where the EU policy goals are accepted and emulated by other states around the world. The Indo-Pacific strategy emphasises the importance of building partnership with countries in the region, both with countries which tend to share these paradigmatic goals and those which are hesitant or cannot muster the resources to this effect.
The EU’s approach will be built on persuasion, dissemination of good governance and standards, as well as financial assistance and technical know-how. This entails an engagement with countries and organisations with which the EU already has existing partnership agreements, for instance Japan, South Korea, Vietnam and ASEAN, as well as those with whom the EU is currently negotiating various forms of free trade and association agreements or in the process of preparing such negotiations, primarily India, Australia, New Zealand, Indonesia, but also Malaysia, Thailand and the Philippines.
Clearly, the EU’s foremost means to achieve its goal of strengthening the rules-based international order is to enlist the support of allies in the region. In this context, the significance of the EU-Asia Connectivity Strategy of 2018 and the Global Gateway initiative of 2021 should be seen in a new light.
Connectivity and the Global Gateway
Connectivity has become a buzzword for the EU’s effort to promote sustainable investment in the larger Asia region. It was first launched in 2018 through the EU-Asia Connectivity Strategy but was bolstered and given a geopolitical significance with the Global Gateway initiative. Connectivity comprises most kinds of investment in physical and digital infrastructure and people-to-people contact. The initiative is premised on promoting sustainability, broadly defined, and therefore encompasses objectives such as fighting climate change, promoting good governance and sustainable development assistance.
With a budget of up to 300 billion euros between 2021 and 2027, the Global Gateway will bolster the ambitious goals of the Indo-Pacific strategy. The initiative aims to strengthen the connectivity partnerships that have already been signed with Japan, India and ASEAN and engage other countries in the larger Asian region on the basis of various connectivity projects. The implementation is based on the participation of European financial institutions and private companies and will draw on a mix of grants and guarantees from the European Fund for Social Development plus (EFSD+).
The Global Gateway initiative is significant for being upfront with its values-based approach, offering development support through sustainable infrastructure investment projects which will be transparent, based on good governance and high human and social standards, so as to prevent corruption, economically non-viable projects and avoid creating dependencies for local communities. Although not explicitly stated in the communication, Global Gateway is intended to provide developing countries in the larger Asian region with an alternative to China’s Belt and Road Initiative and will inevitably constitute a competitor to China’s development assistance model. From this perspective, the EU has with the Global Gateway initiative acquired a potentially significant tool of economic statecraft.
Geopolitical challenges for EU-China relations in the Indo-Pacific region
With the Indo-Pacific strategy the EU ventures into the realm of geopolitics, which is bound to impact its relations to China. The question is whether the EU is ready for geopolitical competition in this region and how it intends to find a role for itself based on strategic autonomy within the confines of the US-China rivalry?
Tentative answers to these questions can be found in the observation that the EU has hardly any other option than to be present in the Indo-Pacific to defend its interests but also to defend the rules-based international order on which it is dependent. The EU is right to seek alliances and partnerships with countries in the region which share its outlook on the international system and are also wary of the US-China rivalry. This includes Japan and South Korea, but also India, Australia and emerging regional powers such as Indonesia. The EU must walk a fine line in the US-Chinese rivalry where it is leaning towards the US but would prefer not to be forced to take a firm stance. This means that it will be difficult for the EU to exercise a policy of strategic autonomy.
The EU also needs to consider how best to handle its future relations with China. For the moment, it can be characterised in terms of strategic ambiguity in the sense that the EU classifies its relations with China from rival to partner depending on the issue area in question. A sought-after partner in the fight against climate change, but a rival when it comes to the values and principles which should reign in the new international order. Further trouble with China in relation to human rights and commitments to observe the rules and principles of international regimes and human rights seem unavoidable. Furthermore, the EU should be prepared for a potential backlash when it starts to implement schemes designed to protect its conversion to a green economy, for instance the carbon border tax, which will not be confined only to China.
In conclusion, the EU must find a way to navigate these difficult choices and devise an approach to handle its future relations with China based on the right mix of autonomy, flexibility and engagement with others.
This article gives the views of the author, and not the position of the China Foresight Forum, LSE IDEAS, nor The London School of Economics and Political Science.